Agriculture

Debt of honour

Print edition : July 21, 2017

Celebrations after Chief Minister Devendra Fadanvis announced the loan waiver on June 12. Photo: S. Sudarshan

Devendra Fadnavis addresses a press conference on loan waiver, in Mumbai on June 24. Photo: Santosh Hirlekar/PTI

The Maharashtra government comes through on its promise of loan waiver to farmers, but many other issues remain unresolved.

THE tough stand taken by farmers in the middle of June seems to be paying off. On June 11, they called off their strike after the government gave a series of assurances. The most important of these was the blanket waiver of loans to farmers owning less than five acres of land, with the option of immediately applying for a fresh loan.

On June 24, the government kept its word and, in a decision ratified by the Cabinet, announced a Rs.34,000-crore crop loan waiver for the State’s marginal farmers. Introduced by Chief Minister Devendra Fadnavis as the Chhatrapati Shivaji Maharaj Krushi Sanman Yojana, the scheme is designed to benefit about 89 lakh farmers.

The press release from the Chief Minister’s office said those having outstanding loans between April 1, 2012, and June 30, 2016, would be entitled for the waiver. Loans up to Rs.1.5 lakh would be written off immediately, making some 35 lakh farmers instantly debt-free.

A one-time settlement scheme was offered to nine lakh farmers who had debts of over Rs.1.5 lakh. They would be eligible for a waiver of 25 per cent of the outstanding amount or Rs.1.5 lakh, whichever was less. The scheme would benefit those farmers who had sought restructuring of their existing loans but still had arrears as of June 30, 2016. Farmers who had been repaying their loans regularly would be eligible for 25 per cent (of their loan component, up to a maximum of Rs.25,000) credited directly to their banks as an incentive for their fiscal management. Even those making their payments in June 2017 would be eligible for this incentive.

Dr Ajit Navle, leader of the Communist Party of India (Marxist) and the All India Kisan Sabha, said there was an element of unfairness in this because many farmers had been paying off their loans by borrowing from moneylenders. “They were honourable in sticking to their loan schedule at great cost to themselves and now they have to pay the price for their honesty,” he said. Navle said their loans should also be written off completely.

The Chief Minister emphasised that the scheme was only for “genuine small farmers in distress” and that those who had an annual income of more than Rs.10 lakh would not be eligible for the scheme. He was emphatic that elected representatives including those in panchayats, traders who are also farmers, big farmers who paid income tax, and Central and State government employees who had their names on the 7/12 extract traditionally called the saath baara utara (an extract from the district land register maintained by the Revenue Department) to show they were farmers would not be eligible for exemption.

Biggest-ever waiver

All Ministers and MLAs of the Bharatiya Janata Party (BJP) have pledged one month’s salary to support the government’s loan waiver, but where the rest of the funds will come from is not clear. This is certainly the biggest-ever loan waiver in Maharashtra.

The Centre had categorically stated that there would be no fiscal help from New Delhi to the States that announced farm loan waivers. While negotiating with the striking farmers, government representatives had said that the State could not afford to waive loans and if it did so it would be at the cost of major infrastructure and other key projects. At a press conference, Fadnavis had also said that implementing the loan waiver would be “difficult” but he was committed to it “in the interest of farmers”. He also said he was hopeful because the decision had been taken in conjunction with Nationalist Congress Party president Sharad Pawar, Shiv Sena chief Uddhav Thackeray and Swabhiman Shetkari Sanghatana leader Raju Shetti, who was one of the leaders of the farmers’ strike.

Apart from saying that the financial burden would be borne by the government and the banks together and would be repaid in instalments over a period of four years, Fadnavis did not elaborate on where the money would come from. He did, however, say that writing off debts was not a long-term solution since the whole cycle of accumulating unpaid debts could recur. To guard against this, he said, the State would invest heavily in long-term farm sector security.

Other issues

Navle said the State had focussed only on crop loans and had turned a blind eye to other farm-linked loans such as those taken for irrigation, farm machinery, polyhouses, godowns and poultry. “When the Congress in 2008 had given a loan waiver they had seen the problem more holistically,” said Navle.

Problems that need to be tackled on a war footing have primarily to do with the marketing of agricultural produce. This and providing irrigation solutions that are managed locally (small projects, check dams, watershed management, and so on) are issues that have been hanging fire for decades.

Presumably, the government will find more in-depth solutions such as remunerative pricing for produce linked to purchase guarantee, minimum wages for agricultural labour, and reintroduction of land mortgage banks.

The current farm loan waiver is a historic one, but farmers are still seething over many injustices. Navle said it was unfair of Fadnavis to say that the average farm loan of Maharashtra’s farmers was about Rs.54,000 and was low compared with that of other States. “Farmers in other States get systemic [i.e. bank] loans that are much higher than those granted by banks in Maharashtra. Here farmers are forced to go to moneylenders to get the actual amount they need,” he said. In essence, the loan waiver does not take these non-systemic loans into account.

In order to address this and other pending issues, farmers’ organisations have organised a meeting in Nashik on July 10 after which they will set out on a tour of the State to mobilise farmers to carry on their fight.

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